weight watchers intl inc (WTW) Key Developments

Weight Watchers Reportedly May Be Takeover Target By Activists

Jul 6 15

Weight Watchers International, Inc. (NYSE:WTW) may attract takeover interest from an unnamed activist hedge fund after shares have lost 84% of their value YTD. According to the report, three sources say a suitor, an activist hedge fund, is talking with potential partners about making WTW’s majority owner an offer, and has recently bought most of WTW’s remaining $144 million in senior loans due April 2016.

Weight Watchers Repays Portion of its Term Loan

Jun 22 15

Weight Watchers International Inc. announced that its offer to prepay up to $229 million of its $300 million senior secured Tranche B-1 term loan at a discount has closed, and a portion of lenders have accepted. The company announced that it would pay $77.2 million plus accrued interest to retire $84.9 million. This move will save Weight Watchers $7.6 million. The company reached a similar deal in March, paying $57.4 million plus accrued and unpaid interest for a $63.1 million chunk of the Tranche B-1 term loan.

Weight Watchers International Inc. Reports Unaudited Consolidated Earnings Results for the First-Quarter Ended April 4, 2015; Provides Earnings Guidance for the Second Quarter and Full Year of 2015

May 5 15

Weight Watchers International, Inc. reported unaudited consolidated earnings results for the first quarter ended April 4, 2015. For the quarter, the company reported revenues of $322.1 million against $409.4 million a year ago. Operating income was $18.0 million against $51.1 million a year ago. Loss before income taxes was $8.9 million against income before income taxes of $36.1 million a year ago. Net loss was $5.5 million against net income of $21.5 million a year ago. Net loss attributable to company was $5.4 million against net income attributable to company of $21.5 million a year ago. Loss per share basic and diluted was $0.10 against earnings per share basic and diluted of $0.38 per share a year ago. Foreign currency negatively impacted EPS by $0.04 in the first quarter of 2015. Adjusted operating income was $23.8 million against $54.7 million a year ago. Adjusted net loss per share was $0.09 against adjusted net income per share of $0.31 a year ago. Net loss and EPS for the first quarter of 2015 were impacted by two items that affect year-over-year comparability. First, the company incurred $5.8 million ($3.5 million after tax or $0.06 per fully diluted share) of charges in connection with its previously disclosed 2015 restructuring plan. Second, the company recorded a gain on early extinguishment of debt of $4.8 million ($2.9 after tax or $0.05 per fully diluted share) for its previously disclosed debt prepayment in the quarter. Adjusted net loss was $4.8 million against adjusted net income of $17.4 million a year ago.
For the year 2015, the company’s earnings guidance to be between $0.40 and $0.70 per fully diluted share. This EPS guidance now includes an approximately $0.21 negative impact from foreign exchange versus the $0.15 impact in its original guidance, and it also excludes the restructuring costs and the gain associated with its first quarter debt tender. Included in its guidance is its $100 million gross cost savings target for 2015 which is on top of the $150 million gross cost reductions achieved over 2013 and 2014. The company expects full year gross margin rate decline of approximately 450 basis points versus 2014 and this includes around 40 basis points of unfavorable foreign exchange impact. Below the line for the year, the company expects interest expense to be approximately $123 million and the tax rate to be approximately 39%. The company now expects CapEx of less than $35 million in 2015, reflecting more focus on tech cost savings and D&A is expected to be in the $55 million range.
The company expects gross margin percentage decline in the second quarter 2015 to be similar to the first quarter's decline, which reflects its lower volumes as well as the added costs for 24/7 Expert Chat and coaching.

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